Posted on 04/03/2008 11:46:03 AM PDT by JZelle
ANNAPOLIS — A Senate committee voted yesterday to increase the income tax on Maryland's highest wage earners.
Members of the Senate Budget and Taxation Committee voted 10-5 to increase the personal income tax on residents who earn $1 million or more, as part of a plan to repeal the tax on computer services they passed in November.
"If you repeal the computer-services tax, you're going to have to backfill it with something," said Senate President Thomas V. Mike Miller Jr., Southern Maryland Democrat. "It's political. It's a very political vote."
Committee members rejected a proposal from Sen. Richard S. Madaleno Jr., Montgomery Democrat, to cut $200 million in state spending instead of increasing the income tax.
"I just don't see how we should move forward with another tax on small business, as a means to remove another tax that we've all come the conclusion would be damaging to the economy," Mr. Madaleno said. "If I were a Virginia economic development official, I'd be knocking on doors saying: 'Come to Virginia. It will reduce your taxes by 75 percent.' "
(Excerpt) Read more at washingtontimes.com ...
There you go, run some more industry and people out of state.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Good. Let ‘em tax some of the rich-biatch lawyers and other Dhims in this state.
Yep, they are very welcome to come here and join us. We love millionaires here. They make Jobs :)
In Georgia :)
He probably wouldn’t get elected there if he had an “R” next to his name on the ballot.
You know how screwed up the state’s political leadership is when a MONTGOMERY COUNTY DEMOCRAT offers an conservative alternative to the tax bill in question.
Maryland “Freak State” PING!
And that's just about the only good thing about this mess!
Oh, I don’t think party has anything to do with this. He’s in Montgomery County, and he probably represents some wealthy constituents whose ox would be gored if this thing passes.
The fine folks of Potomac must be sweating bullets!
Awww, bless their hearts!
The tax to be repealed is a 6% tax on computer services. Currently, there is no tax at all on computer services.
This tax will be onerous on companies that perform computer services, and will persuade many of these firms to leave Maryland. The additional financial burden will be to collect an additional $60,000 of tax on top of every million dollars of revenue. Anyone who thinks that these companies will be able to pass through the entire tax to clients is kidding himself. Computer services companies will see substantial declined in profitability.
And it isn’t just that it’s a significant financial burden, it’s also a significant increase in regulatory burden. A lot of these companies only provide services, and thus, don’t currently collect sales tax.
As well, just when the tax will be due by whom for what services performed in which locations is all up in the air. A friend of mine who is a tax lawyer said that the legislature hasn’t made any of that at all clear, and that it will likely take some years of litigation (lawsuits by the government against computer services companies) to work out the details. The potential burden of not knowing what to collect from whom, when or where, might exceed the fact that we’ll be told to collect an additional $60,000 for every million dollars of revenues.
Maryland does pretty good with information technology companies right now, better than it deserves. This tax will cause the IT sector in Maryland to take a big hit.
The suggested replacement tax, however is an increase of 0.75% to the income tax on incomes of over $1 million per year. So, someone with TAXABLE income of $2 million will pay an extra $7,500 per year. The fellow with a mere $1.1 million in income will pay an extra $750.
I’m not in favor of either tax, but the replacement tax will do less harm to the state than the computer services tax.
The additional burden on folks with incomes exceeding $1 million will be much smaller than the burden on computer services companies. As well, there are far more computer services companies in Maryland than there are folks making over $1 million per year. Too, all the folks making over $1 million per year are already paying taxes, already filling out a state form 501 (income tax return).
I’d prefer that the repeal of this tax would be entirely financed by budget cuts. But it doesn’t look like that’s going to happen (although nearly half of the repeal will be financed by budget cuts, and that’s a start). If given a choice between the current computer services tax that will come on line July 1, or the proposed increase in the income tax, I’ll take the latter.
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